Written by Benjamin Kingsley
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A financial power of attorney and a trust are two distinct legal tools that can work together as part of a comprehensive estate plan. However, it’s important to understand how they interact and their limitations in relation to each other.
A financial power of attorney (POA) grants an agent the authority to manage the principal’s financial affairs. This can include tasks like paying bills, managing investments, and handling banking transactions. However, a standard POA does not automatically give the agent authority over assets held in a trust.
Trusts are separate legal entities that hold assets for the benefit of designated beneficiaries. The trustee, not the power of attorney agent, has the authority to manage trust assets. This means that even if someone has a financial POA, they cannot automatically access or control assets held in a trust unless they are also named as a trustee.
There are some ways that a financial POA can interact with trusts:
1. The POA document can explicitly grant the agent authority to manage trusts or act as a trustee. This should be clearly stated in the POA document.
2. The principal can name the same person as both their financial POA agent and the successor trustee of their trust. This allows for seamless management of both trust and non-trust assets.
3. A POA agent may have the authority to create or modify trusts on behalf of the principal, if the POA document specifically grants this power.
4. In some cases, a POA agent may be able to transfer assets into a trust, depending on the powers granted in the POA document and the terms of the trust.
Do you have questions about or need assistance with a power of attorney? Please click here to email us at contact@legalandme.com.
Do you need a power of attorney form? We make a do-it-yourself power of attorney: finance power of attorney or healthcare power of attorney.